New Delhi, January 23Keeping up the pressure on Mukesh Ambani, younger brother Anil has sent to the RIL board a detailed 500-page note concerning corporate governance in the Reliance empire, an issue he has repeatedly raised in the public feud between them since mid-November.

Hike in apple price to spell doom for HPMCShimla, January 23The decision of the government to supply apple procured under the market intervention scheme at an exorbitantly high rate of Rs 4 per kg may spell the doom for the state-owned HPMC which is already in the red.

Bank account
BoI Q3 net dips by 67 pcNew Delhi, January 23The Bank of India today reported 67 per cent decline in its net profit at Rs 75.03 crore for the quarter ended December 31, 2004, as compared to Rs 228.54 crore in the year-ago period.

US
tycoon weds for 3rd time
MIAMI: US real estate
mogul Donald Trump took a third shot at married life, tying the knot
with model Melania Knauss before hosting an extravagant reception with
other celebrities at his lavish south Florida mansion. Mr Trump (58)
married his companion of six years, a 34-year-old curvaceous
Slovenian-Austrian beauty on Saturday. — AFP

Flowers are draped at the Bethesda-by-the-Sea Episcopal Church where Donald Trump married Slovenian model Melania Knauss in Palm Beach, Florida. This is Trump’s third marriage.
— Reuters

Market scan

Quarterly results positive, market negative
During the last fortnight, the Sensex was down by 125 points but it appears that the market indices are settling down. During the last week, the quarterly results have been good.

New Delhi, January 23
Keeping up the pressure on Mukesh Ambani, younger brother Anil has sent to the RIL board a detailed 500-page note concerning corporate governance in the Reliance empire, an issue he has repeatedly raised in the public feud between them since mid-November.

The bulky note sent to the corporate governance committee of the board of the flagship company RIL, of which Mukesh is the chairman and Anil the vice-chairman, deals extensively with what the younger brother regards as flaws in corporate governance within the group, informed sources said today.

Anil’s document was sent days ahead of RIL’s board meeting in Mumbai on January 21. But, the issue of corporate governance did not figure in the discussions there.

In fact, Y.P. Trivedi, an independent director of RIL, heading the corporate governance committee, had said that eminent retired judges had endorsed the corporate governance practices, thus, virtually giving a clean chit.

But if “Anil has to write to the Board which would refer the matter to the corporate governance panel. There is no shying away from any issue raised or referred to us. We will go through it,” Trivedi said.

When contacted on this issue, a spokesperson for Anil Ambani declined to comment.

Anil has, in fact, made an issue of what he perceives to be a conflict of interest between the business interests of Anand Jain, a close associate of Mukesh, and various key positions he holds in the group.

In fact, the younger brother had even resigned as Vice-Chairman and Director from the Board of Reliance group company IPCL, saying he would not share a seat on it with Jain, whom he has accused of conspiring to divide the family.

Yesterday, Anil had virtually turned down IPCL’s request to reconsider his resignation, saying various issues, including corporate governance and disclosure need to be resolved before any rethinking on his decision.

Requesting “appropriate steps” in the interest of RIL’s 30 lakh shareholders, Anil is believed to have expressed “deep concern that RIL has failed to adhere to highest standards of corporate governance, transparency and disclosure”.

The extensive note is understood to have covered various issues, including RIL’s investment of Rs 12,000 crore in Reliance Infocomm.

Meanwhile, Mr Y.P. Trivedi today said his committee was looking into all the issues relating to corporate governance practices raised by Anil Ambani.

After the January 21 board
meeting, Trivedi had said that there was no violation of corporate governance norms and that everything was in place relating to issues concerning RIL’s investment in Reliance Infocomm, headed by Mukesh Ambani.
— PTI

Shimla, January 23
The decision of the government to supply apple procured under the market intervention scheme at an exorbitantly high rate of Rs 4 per kg may spell the doom for the state-owned HPMC which is already in the red.

The corporation has been finding processing of apple uneconomical even at the earlier rate of Rs 2.25 per kg as the cost of production of its juice concentrate is over Rs 55 per kg. It is too high as the apple juice concentrate produced in Jammu and Kashmir is available in the market at Rs 40 per kg. The Chinese product is even cheaper.

The reason for it, senior officers of the corporation point out , is that apple is being made available for processing at 80 paise per kg in Jammu and Kashmir. With the increase in rate from Rs 2.25 per kg to Rs 4.25 per kg, the cost of production will go up further to over Rs 75 per kg. There will be no takers for such costly apple juice concentrate.

The high cost of apple forced the corporation to scale down its processing operations and it produced only 350 tonnes of juice concentrate this season as against the normal 500 tonne. The sale of procured apple in the market also turned out to be a losing proposition as the return was only Rs 2.40 per kg.

The corporation has urged the government to review its decision and charge the last season rate of Rs 2.25 per kg. The BJP government had even supplied apple for processing free of cost as it saved a huge quantity of fruit from rotting.

The increase in rates of apple has come at a time when the loss-making public sector undertaking had started looking up. It’s accumulated losses had crossed Rs 28 crore till March 31 ,2004 but it earned an operational profit of Rs 85 lakh in 2002-03 and Rs 1.25 crore the following year.

New Delhi, January 23
The All-India Garment Exporters Guild has urged the Finance Minister P. Chidambaram to reconsider the ministry’s move to scale down the duty entitlement passbook benefits (DEPB), drawback rates with immediate effect from January 19.

The ministry has decided to convert them to weight criteria in lieu of present ad valorem rates. “This is sudden death for garment exports. Entire scenario deserves to be revisited as it ignores the ground realities governing the garment exports potentials,” Mr Chand K. Anand, president of the Exporters Guild, said.

In a memorandum submitted to the ministry, he said in the free quota regime, trade was expecting pragmatic measures to boost the market and business due to tariff free access granted by the neighbouring Sri Lanka, Bangladesh, Pakistan, Nafta and countries under Sub-saharan region.

“This tariff disadvantage to Indian garment exporters, ranging from 15 per cent to 30 per cent needs to be bridged for their survival,” he said adding that eight per cent appreciation of rupee further adds to their uncompetitiveness.

The exporters said the decision of reduction in drawback rates should be corrected otherwise it would damage their exports beyond repairs in coming months.

Mr Anand said the new perception of drawback for garment sector by weight at Rs 42 per kg, as against the existing rates of 10.6 per cent of FOB value, subject to a maximum of Rs 40 per piece is lop-sided and unrealistic, as it suffocates the value addition aspect of Indian garment exports; the major portion of the exports.

Ironically, the weight criteria will give more drawback to garment made of coarse and ordinary fabrics, he said, in contrast to garments made out of finer fabrics like double mercerised fabrics, which consume a lot of duty paid chemicals.

Similarly, this new barometer will not distinguish between various counts, finishes, trimmings & embellishments and embroidery and other value additions, which are incurring heavy excise and customs duty. The weight of finer and better processed fabrics like georgette and chiffon are much less than unmercerised fabric. Thus, new drawback rates would place value added garment exports at a disadvantage and make it still more uncompetitive.

New Delhi, January 23
The Bank of India today reported 67 per cent decline in its net profit at Rs 75.03 crore for the quarter ended December 31, 2004, as compared to Rs 228.54 crore in the year-ago period.

The total income of the bank also declined by 6.4 per cent to Rs 1743.27 crore for the quarter ended December 31, 2004, from Rs 1862.05 crore for the same quarter last fiscal, the bank informed the Bombay Stock Exchange.

Union Bank

Union Bank of India registered a 60.63 fall in net profit for the quarter ending December 31, 2004 at Rs 59.07 crore as compared to Rs 150.04 crore in the corresponding period of previous fiscal.

Total income of the bank rose to Rs 1,480.18 crore during the quarter under review as against Rs 1,344.01 crore posted during the same period of the previous fiscal, it said.

Corporation Bank

The Corporation Bank today reported a 43 per cent growth in net profit at Rs 161.69 crore during the third quarter ended December 31, 2004 as against Rs 113.28 crore in the corresponding quarter in 2003.

The total income of the bank grew by 15 per cent to Rs 772.52 crore during the October-December quarter this fiscal compared to Rs 673.57 crore in the year-ago quarter, it informed the BSE.
— PTI

Market scan

by J.C. Anand

Quarterly results positive, market negative

During the last fortnight, the Sensex was down by 125 points but it appears that the market indices are settling down. During the last week, the quarterly results have been good. According to an analysis made by the Economic Times, of the 215 leading companies from IT, pharmaceutical, auto and banking sectors, the net profit was a 27 per cent rise. Several medium and small-cap companies also performed very well. Two-wheeler companies and some pharmaceutical companies posted below-expectation results. But the market has not reacted positively to the overall performance of the corporate sector for its 3rd quarter results.

The hallmark of the market trading has been a high degree of volatility. When the market opens on a high positive note, it closes lower than the previous day’s closing. The same happens when the market opens lower but closes on a positive note on the same day.

FIIs have been sometimes blamed for the volatility of the market. But this appears to be a misplaced charge. According to data available with Sebi, the total investment in the equity shares made by the FIIs on December 31,2004 was $ 9, 188 million, the highest so far. The FIIs have 187.8 million shares of the 30 scrips in the Sensex basket between October 2004 and December 2004, taking an average holding in the Sensex stock to a shade over 20 per cent.

Up to January 13, 2005 the total net sales amounts to not more than Rs 168 crore. This means that the FIIs are holding on to their investments and there has not been any major sale during the first fortnight of the calendar year 2005. The stock market is not moving up partially because of the absence of fresh inflow of FII funds and partially due to the healthy bearish correction to the bullish stock market.

The volatility in the market is largely due to day-trading by the operators. Delivery-based investments are relatively meagre. It is quite on the cards that unless the long-term investors regain confidence in the market, volatility syndrome would continue.

Reliance

In general, the Reliance group of companies have done well. Reliance Energy reported a 155 per cent rise in the net profit. IPCL’s net profit is up by 133 per cent. Reliance Industry’s net profit during the 3rd quarter is higher by 52 per cent. The only Reliance group company which has not done well is Reliance Capital, which has posted a lower net profit of Rs 24.38 crore (as compared to 28.89 crore for the corresponding period last year). But the Reliance group shares are quoting much lower than fortnight back. Even Reliance Industries is quoting around Rs 513 per share in spite of the buy-back purchases by the company. The average price for the buy-back so far is about Rs 515 per share.

Tata

The Tata group of companies have also done very well except for Tata Finance which is due to be merged with Tata Motors. Tisco has almost doubled its net profit and is planning a vast expansion in the next two or three years. Tata Chemicals has also done very well. Tata Investments has, as expected, performed extremely well.

IT majors Infotech, Wimco, Satyam, have performed better than the market expectation. The stock market is unpredictable, but one can say that during this week, it will stay range-bound.

IPCL appears to be an under-volued scrip and one can make long-term investment in it.

Tax advice

by S.C. Vasudeva

Capital gain from plot sold

Q. Kindly advise me on the following points:

I purchased a plot on 20.04.1990 for Rs 30,000 plus Rs 3750 (registry charges) which I sold in January 2005 on power of attorney for Rs 2,00,000 (less commission of Rs 4000)

(a) What would be the capital gain?

(b) I am a senior citizen and my income for the year ending 31.03.2005 would be as under:

Pension: Rs 76,800

Income from bank & post office: Rs 80,640

Deposited in

PPF: Rs 50,000

What would be my tax liability?

(c) Can I utilise the capital gain on the internal completion of a Chandigarh Housing Board flat which I purchased on power of attorney basis three years back, to save the IT on Capital gain?

— Inderjit, Chandigarh

A: 1 The answers to your queries are as under:

(a) Computation of capital gain

Amount (Rs) Sale consideration: Rs 2,00,000

Less: Expenses on transfer: Rs 4,000

Net consideration Rs 1,96,000

Less: indexed cost of acquisition: 33,750 X 480 Rs 89,010 182

Long term Capital gain: Rs 1,06,990

(b) Tax liability (without considering exemption of capital gain)

Amount (Rs)

Income under the head salary

Pension: Rs 76,800

Less: Standard deduction: Rs 30,000 46,800

Income under the head capital gain

Long term Capital gain (LTCG) 1,06,990

Income from other sources

Bank interest: 80,640/-

Gross total income without LTCG: 1,27,440

Less: 80L 12,000

Total income without LTCG: Rs 1,15,440

Tax on above: Rs 12,088

Add: tax on LTCG 20 per cent of Rs 1,06,990 Rs 21,398

Tax payable: Rs 33,486

Less: rebate u/s 88B Rs 20,000

Less: rebate u/s 188 15 per cent of 50,000 7,500/-27,500/-

Tax payable: 5,986/-

Add: Education Cess @ 2%: 120/-

Total payable: Rs 6,106/-

(c) From your query, the expression “internal completion” is not clear to me and therefore I am unable to give you a definite answer. For your benefit, I would like to state that the deduction under Section 54 F of the Act is available if the net consideration is utilised for the acquisition/construction of a residential house within a period of two years/three years from the date of transfer of the original asset.

Glaxo shares

Q: I have purchased 63 shares of Glaxo Smith Bombay at different rates and different dates since 1980. I got 63 shares as bonus. Total 126 shares. I have sold them in August, 2004 for about Rs 75,000. As I don’t have any record of dates and rates of purchase, how should I calculate the long term capital gain? I have used the whole amount in buying a built house for my son, within two months. Can this be useful in matter of capital gain calculation? Or how can I save this long-term capital gain Tax?

— Ram Murti Abrol, Malerkotla (Pb.)

A: (a) In case of bonus shares, the cost of acquisition is ‘Nil’ and therefore the sale proceeds in respect of 63 bonus shares would be chargeable to capital gains tax.

(b) In respect of the original shares, since you do not have the record of date and rates of purchase, it is advisable that you consider the face value of the shares as cost and compute the capital gains.

(c) If the entire net consideration (sale proceeds less expenses on transfer) has been utilised by you for purchase of a residential house property in your own name then there will be no liability to pay tax provided you satisfy the conditions laid down in Section 54 F of the Act.

AdobeNew Delhi, January 23
US-based publishing software firm Adobe will localise its popular Acrobat reader in Hindi, eyeing the multi-million dollar opportunity in the Indian government and financial sectors. “We will localise our reader in Hindi and the work is underway. Primarily, the Noida campus is working at it while co-development is happening around the world,” Adobe India Managing Director Naresh Gupta said.
— UNI

Auto exportsNew Delhi, January 23
Passenger cars, motor cycles and commercial vehicles fuelled automobile exports to a healthy 32.7 per cent growth in the nine months of this fiscal with foreign shipments clocking 4,53,591 units as against 3,41,626 in the same period last fiscal, according to figures released by the Society of Indian Automobile Manufacturers.
— PTI

Bhel awardedNew Delhi, January 23
State-run engineering firm Bharat Heavy Electricals Ltd has won the IMC Ramakrishna Bajaj National Quality Award 2004 for business excellence. Bhel is the first public sector as well as the first engineering and manufacturing company to bag the award, a BHEL release said today.
— PTI

PNBSurat, January 23
The Punjab National Bank has posted a net profit of Rs 753.22 crore during the half year ending September 30, 2004, as compared to Rs 551.22 crore during the corresponding period in the previous year thus registering a growth of 33 per cent. Talking to reporters here today, bank’s Executive Director K.C. Chakravarty said the total business of the bank stood at Rs 1,46,459 crore at the end of September, 2004, as against Rs 1,20,382 crore during the corresponding period in the previous year.
— UNI

WEF meetNew Delhi, January 23
Commerce and Industry Minister Kamal Nath will lead the Indian delegation at the five-day annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, slated to be held from January 26. The minister will address four important sessions at the WEF - ‘India Meets Doha’, ‘Beijing and Delhi - Navigating New Territories’, ‘India’s Bigger, Better Business Horizons’ and ‘Business Interaction Group-India’, an official statement said here today.
— UNI

SBI programmeChandigarh, January 23
United Nations has recognised year 2005 as ‘Year for micro finance’. The SBI, Chandigarh Circle, is launching the programme on Tuesday. To mark this occasion, an exhibition-cum-sale of goods produced by Self Help Groups from the states of Himachal Pradesh, J & K, Punjab and Haryana will be organised.
— TNS